tualatin valley fire & rescue answer brief

8/11/2019 TUALATIN VALLEY FIRE & RESCUE Answer Brief

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IN THE SUPREME COURT OF THE STATE OF OREGON

EVERICE MORO; TERRI DOMENIGONI; CHARLES CUSTER; JOHNHAWKINS; MICHAEL ARKEN; EUGENE DITTER; JOHN O'KIEF;

MICHAEL SMITH; LANE JOHNSON; GREG CLOUSER; BRANDON

SILENCE; ALISON VICKERY; and JIN VOEK,Petitioners,

v.

STATE OF OREGON; STATE OF OREGON by and through theDepartment of Corrections; LINN COUNTY; CITY OF PORTLAND; CITY

OF SALEM; TUALATIN VALLEY FIRE & RESCUE;ESTACADASCHOOL DISTRICT; OREGON CITY SCHOOL DISTRICT; ONTARIO

SCHOOL DISTRICT; BEAVERTON SCHOOL DISTRICT; WEST LINNSCHOOL DISTRICT; BEND SCHOOL DISTRICT; and PUBLIC

EMPLOYEES RETIREMENT BOARD,

Respondents,

and

LEAGUE OF OREGON CITIES; OREGON SCHOOL BOARDS

ASSOCIATION; and ASSOCIATION OF OREGON COUNTIES,

Intervenors,

and

CENTRAL OREGON IRRIGATION DISTRICT,

Intervenor below.

S061452 (Control)

WAYNE STANLEY JONES,Petitioner,

v.

PUBLIC EMPLOYEES RETIREMENT BOARD; ELLEN ROSENBLUM,

Attorney General; and JOHN A. KITZHABER, Governor,

*Caption continued on next page FILED: August 2014

August 25, 2014 01:32 PM


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Respondents.

S061431

MICHAEL D. REYNOLDS,Petitioner,

v.

PUBLIC EMPLOYEES RETIREMENT BOARD, State of Oregon; and

JOHN A. KITZHABER, Governor, State of Oregon,Respondents.

S061454

GEORGE A. RIEMER,Petitioner,

v.

STATE OF OREGON; OREGON GOVERNOR JOHN KITZHABER;

OREGON ATTORNEY GENERAL ELLEN ROSENBLUM; OREGONPUBLIC EMPLOYEES RETIREMENT BOARD; and OREGON PUBLIC

EMPLOYEES RETIREMENT SYSTEM,Respondents.

S061475

GEORGE A. REIMER,Petitioner,

v.

STATE OF OREGON; OREGON GOVERNOR JOHN KITZHABER;

OREGON ATTORNEY GENERAL ELLEN ROSENBLUM; PUBLICEMPLOYEES RETIREMENT BOARD; and PUBLIC EMPLOYEES

RETIREMENT SYSTEM,Respondents.

S061860

*Caption continued on next page FILED: August 2014


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_____________________________________________________

RESPONDENT TUALATIN VALLEY FIRE & RESCUES

ANSWERING BRIEF AND

SUPPLEMENTAL EXCERPT OF RECORD

_____________________________________________________

Challenge to Constitutionality of SB 822 and SB 861

Edward H. Trompke, OSB # 843653Jordan Ramis PC

Two Centerpointe Dr Ste 600

Lake Oswego OR 97035

(503) [email protected]

Attorney for Respondent TualatinValley Fire & Rescue

Gregory A Hartman, OSB # 741283Bennett Hartman Morris & Kaplan

210 SW Morrison St Ste 500

Portland OR 97204


Attorney for Petitioners EvericeMoro, Terri Domenigoni, Charles

Custer, John Hawkins, Michael

Arken, Eugene Ditter, John O'Kief,

Michael Smith, Lane Johnson, GregClouser, Brandon Silence, Alison

Vickery, and Jin Voek

George A. Riemer, OSB # 804712Arizona CJC

1501 W. Washington St Ste 229Phoenix AZ 85007


Petitioner Pro se

Michael D. Reynolds8012 Sunnyside Ave N

Seattle WA 98103(206)-910-6568

[email protected] Pro se

Eugene J. Karandy, II, OSB # 972987Linn County Attorney's Office

PO Box 100Albany OR 97321


Attorney for Respondent Linn County

*Counsel list continued on next page

Wayne Stanley Jones18 N Foxhill Rd

North Salt Lake UT 84054(801) 296-1552

[email protected] Pro se

FILED: August 2014
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Daniel B. Atchison, OSB # 040424City of Salem

Legal Department / Room 205

555 Liberty Street SE

Salem OR 97301(503) 588-6003

[email protected] for Respondent City of Salem

Harry M. Auerbach, OSB # 821830City Attorney's Office

1221 SW 4th Ave Ste 430

Portland OR 97204


Attorney for Respondent City ofPortland

Sharon A. Rudnick, OSB # 830835

Harrang Long Gary Rudnick PC360 E 10th Ave Ste 300

Eugene OR 97440-3273(541) 485-0220

[email protected] for Respondents Association

of Oregon Counties, Linn County,Estacada School District, Oregon City

School District, Ontario School District,West Linn School District, Bend School

District, Oregon School BoardsAssociation, and Beaverton School

District

Anna Marie Joyce, OSB # 013112

Department of Justice AppellateDivision

1162 Court St NESalem OR 97301


Attorney for Respondents EllenRosenblum, Public Employees

Retirement System, PublicEmployees Retirement Board, John

A. Kitzhaber, and State of Oregon

Leora Coleman-Fire, OSB # 113581Schwabe Williamson & Wyatt PC -

Portland1211 SW Fifth Ste 1600

Portland OR 97204


Attorney for Intervenor League of

Oregon Cities

Honorable W. Michael Gillette,OSB # 660458

Schwabe Williamson & Wyatt PC -Portland

1211 SW Fifth Ste 1600

Portland OR 97204(503) 796-2927

[email protected]

Attorneys for Intervenor League ofOregon Cities

*Counsel list continued on next page FILED: August 2014


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William F. Gary, OSB # 770325

Harrang Long Gary Rudnick PC360 E 10th Ave Ste 300

Eugene OR 97440-3273

(541) 485-0220

[email protected] for Respondents Linn County,

Estacada School District, Oregon CitySchool District, Ontario School District,

West Linn School District, Bend School

District, Oregon School Boards

Association, and Beaverton SchoolDistrict

Lisa M. Freiley, OSB # 912763

Oregon School Boards AssociationPO Box 1068

Salem OR 97308

(503) 588-2800

[email protected] for Respondents Estacada

School District, Oregon City SchoolDistrict, Ontario School District,

West Linn School District, Bend

School District, and Oregon School

Boards Association

Aruna A. Masih, OSB # 973241

Bennett Hartman Morris & Kaplan LLP210 SW Morrison St Ste 500

Portland OR 97204(503) 227-4600

[email protected] for Petitioners Everice Moro,

Terri Domenigoni, Charles Custer, JohnHawkins, Michael Arken, Eugene

Ditter, John O'Kief, Michael Smith,Lane Johnson, Greg Clouser, Brandon

Silence, Alison Vickery, and Jin Voek

Rob Bovett, OSB # 910267

Association of Oregon Counties1201 Court St NE, Ste 300

Salem OR 97301(503) 585-8351

[email protected] for Respondent Linn

County and Intervenor Associationof Oregon Counties

Sarah K. Drescher, OSB # 042762Tedesco Law Group

3021 NE Broadway

Portland, OR 97232(866) 697-6015

[email protected]

Attorneys for Amicus Curiae IAFF

William B. Crow, OSB # 610180Schwabe Williamson & Wyatt PC

1211 SW 5th Ave Ste 1900

Portland OR 97204(503) 796-2406

[email protected]

Attorney for League of OregonCities



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Keith L. Kutler, OSB # 852626Oregon Department of Justice

Tax & Finance Division

1162 Court St NE

Salem OR 97301-4096(503) 947-4342

[email protected] for Respondents Ellen

Rosenblum, Public Employees

Retirement System, Public Employees

Retirement Board, John A. Kitzhaber,and State of Oregon

Matthew J. Merritt, OSB # 122206Department of Justice

Appellate Division

1162 Court St NE

Salem OR 97301(503) 378-4402

[email protected] for Respondents Ellen

Rosenblum, Public Employees

Retirement System, Public

Employees Retirement Board, JohnA. Kitzhaber, and State of Oregon

Sara Kobak, OSB # 023495

Schwabe Williamson & Wyatt PC -Portland

1211 SW Fifth Ste 1900Portland OR 97204


Attorney for Intervenor League ofOregon Cities

Kenneth A. McGair, OSB # 990148

Portland Office of City Attorney1221 SW 4th Ave, Ste 430

Portland OR 97204(503) 823-4047

[email protected] for the City of Portland

Michael A. Casper, OSB # 062000

Dept. of Justice Appellate Division1162 Court St NE

Salem OR 97301(503) 947-4540

[email protected]

Attorneys for Ellen Rosenblum, PublicEmployees Retirement System, Public

Employees Retirement Board, and John

A. Kitzhaber

Craig A. Crispin, OSB # 82485

Crispin Employment Lawyers1834 SW 58th Avenue, Suite 200

Portland, Oregon 97221(503) 293-5759

[email protected]

Attorneys for Amicus Curiae AARP



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Kenneth Scott Montoya

City Attorneys Office555 Liberty St, SE, Suite 205

Salem, OR 97301

OSB # 064467


Attorney for Respondent City of Salem

Douglas L. Steele

WOODLEY & McGILLIVARY1101 Vermont Ave, N.W.

Suite 1000

Washington, D.C. 20005



Thomas A. Woodley

WOODLEY & McGILLIVARY1101 Vermont Ave, N.W.

Suite 1000Washington, D.C. 20005



FILED: August, 2014
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TABLE OF CONTENTS

RESPONDENT TUALATIN VALLEY FIRE & RESCUES

ANSWERING BRIEF

STATEMENT OF THE CASE

I. NATURE OF THE ACTION .......................................................... 1

II. QUESTIONS PRESENTED ON APPEAL .................................... 1

Question 1: Do Petitioners raise a justiciable controversy and

state a claim with respect to TVF&R? ............................................... 1

Question 2: Doesformer ORS 238.360 (2011) demonstrate aclear and unmistakable expression of the legislatures intention to

create a contractual right in Petitioners to receive an annual

COLA under the formula set forth in that statute? ............................ 1

Question 3: If ORS 238.360 constitutes a statutory contract,

does the 2013 legislation violate either Article I, 21 of theOregon Constitution or Article I, 10, clause 1 of the United

States Constitution by substantially impairing the statesobligation under such contract? ......................................................... 1

Question 4: If ORS 238.360 constitutes a statutory contract, but

the 2013 legislation does not substantially impair the statesobligation of that contract, does that legislation breach any

contractual right Petitioners have under ORS 238.360? .................... 2

Question 5: If the 2013 legislation impaired TVF&Rs

contractual obligation under the aforementioned laws, was such

impairment nevertheless constitutionally permissible as areasonable and necessary means to address a significant and

legitimate public purpose? ................................................................. 2

Question 6: Does the 2013 legislation affect a taking of privateproperty for public use without just compensation in violation of

Article I, 18 of the Oregon Constitution or the 5thAmendmentto the United States Constitution? ...................................................... 2


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Question 7: Are attorneys fees available if Petitioners prevail? ...... 2

III. SUMMARY OF ARGUMENT ....................................................... 2

IV. SUMMARY OF MATERIAL FACTS ........................................... 3

RESPONSE TO ASSIGNMENTS OF ERROR

V. AS A PRELIMINARY MATTER, THERE IS NO

JUSTICIABLE CONTROVERSY, AND PETITIONERS

CUSTER AND DITTER HAVE FAILED TO STATE A

CLAIM AGAINST TVF&R ........................................................... 4

VI. RESPONSE TO PETITIONERSFIRST AND THIRDASSIGNMENTS OF ERROR ......................................................... 7

A. Standard of Review ............................................................... 7

B. The 2013 Legislative Changes to the Formula by Which

COLAs are Calculated Under ORS 238.360 Do NotImpair a Contract, In Violation of the Oregon and United

States Constitutions. .............................................................. 8

C. There is no Contact Between Petitioners and TVF&R ......... 8

i. The First Line of Cases ............................................... 9

ii. The Second Line of Cases ........................................ 12

D. Attorneys Fees Are Not Available ...................................... 15

i. ORS 652.200 is Inapplicable .................................... 15

ii. Common Fund Doctrine ........................................... 16

VII. RESPONSE TO PETITIONERS SECOND ASSIGNMENT

OF ERROR .................................................................................... 16

A. Standard of Review ............................................................. 16


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B. This Court Has Fully Addressed Petitioners TakingClaim in Strunk................................................................... 17



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INDEX OF AUTHORITIES

CASES CITED

City of Enterprise v. State,156 Or 623, 69 P2d 953 (1937) .......................................................... 11

Graves v. Arnado,

307 Or 358, 768 P2d 910 (1989) ........................................................ 10

Hughes v. State,314 Or 1, 20, 838 P2d 1018 (1992) .............................................. 12, 13

Johnson v. City of Pendleton,

131 Or 46, 280 P 873 (1929) .......................................................... 9, 10

Klamath County Commissioners v. Select County Employees,148 Or App 48, 939 P2d 80 (1997) .............................................. 10, 11

McBride v. Magnuson,

282 Or 433, 4367, 578 P2d 1259 (1978) ............................................ 11

Miles v. City of Baker,152 Or 87, 51 P2d 1047 (1935) ............................................................ 9

Rooney v. Kulongoski,

322 Or. 15, 902 P.2d 1143 (1995) ...................................................... 11

Stovall v. State by and Through Dept of Transportation,324 Or 92, 922 P2d 646 (1991) ...................................................... 6, 14

Strunk v. PERB,

338 Or 145, 108 P3d 1058 (2005) ........................ 4, 5, 7, 12, 16, 17, 18

Strunk v. PERB,

341 Or 175, 139 P3d 956 (2006) ........................................................ 16

Swartout v. Precision Castparts Corp.,

83 Or App 203, 730 P2d 1270 (1986) ............................................... 15


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v

STATUTES

ORS 174.010 ............................................................................................ 14

ORS 238.238A.210 .................................................................................... 2

ORS 238.250 .............................................................................................. 4

ORS 238.285 .............................................................................................. 4

ORS 238.300 .............................................................................................. 4

ORS 238.360 ...................................................................................... 1, 2, 8

ORS 238.575 .............................................................................................. 2

ORS 478.221 ............................................................................................ 11

ORS 652.200 ............................................................................................ 15

OTHER AUTHORITIES

Oregon Constitution Article I, 18 ...................................................... 2, 16

Oregon Constitution Article I, 21 ........................................................ 1, 7

Senate Bill 822 ................................................................................. 1, 4, 14

Senate Bill 861 ................................................................................. 1, 4, 14

United States Constitution Article I, 10 ............................................... 1, 7

United States Constitution 5th Amendment ........................................ 2, 16

United States Constitution 14th Amendment .......................................... 16


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STATEMENT OF THE CASE

Respondent Tualatin Valley Fire & Rescue (TVF&R) accepts

Petitioners Custers and Ditters (Petitioners) statement of the case except as

stated below.

I. NATURE OF THE ACTION.

Respondents accept Petitioners descriptions of the action, except to the

extent they characterize the legal impacts of SB 822 and SB 861 (sometimes,

the 2013 legislation), which speak for themselves.

II. QUESTIONS PRESENTED ON APPEAL.

Respondents reject Petitioners questions presented, and offer the

following:

Question 1: Do Petitioners raise a justiciable controversy and state a

claim with respect to TVF&R?

Question 2: Doesformer ORS 238.360 (2011) demonstrate a clear and

unmistakable expression of the legislatures intention to create a contractual

right in Petitioners to receive an annual COLA under the formula set forth in

that statute?

Question 3: If ORS 238.360 constitutes a statutory contract, does the

2013 legislation violate either Article I, 21 of the Oregon Constitution or

Article I, 10, clause 1 of the United States Constitution by substantially

impairing the states obligation under such contract?


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Question 4: If ORS 238.360 constitutes a statutory contract, but the

2013 legislation does not substantially impair the states obligation of that

contract, does that legislation breach any contractual right Petitioners have

under ORS 238.360?

Question 5: If the 2013 legislation impaired TVF&Rs contractual

obligation under the aforementioned laws, was such impairment nevertheless

constitutionally permissible as a reasonable and necessary means to address a

significant and legitimate public purpose?

Question 6: Does the 2013 legislation affect a taking of private property

for public use without just compensation in violation of Article I, 18 of the

Oregon Constitution or the 5thAmendment to the United States Constitution?

Question 7: Are attorneys fees available if Petitioners prevail?

III. SUMMARY OF ARGUMENT.

The 2013 legislation amends the PERS statutes in two ways, only one of

which is relevant to the claims of Petitioners against TVF&R: it amends former

ORS 238.360, ORS 238.238A.210, and ORS 238.575 to adjust the manner in

which annual cost of living adjustments (COLAs)to PERS retirement

allowances are calculated by the PERB. It does not change the manner in

which any employer contribution to PERS is allocated to TVF&R.

Petitioners have failed to allege any current and actual controversy

between either of them and TVF&R, and they have failed to state a claim.


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There is no allegation of breach of any contract term by TVF&R rendering the

matter not ripe, and lacking any adversity. In addition, whatever decision is

made by this court, the PERB will compute and allocate an employer

contribution to TVF&R, and TVF&R will pay that amount. There is, however

an allegation of a breach by the state, but unless the PERB refuses to compute

an employer contribution or TVF&R refuses to pay that amount, there is no

current controversy, and any potential controversy is not ripe.

The 2013 legislation does not constitute an impairment of contract or a

taking under either the Oregon or federal Constitutions, because neither law

makes any change to any statutory contract of TVF&R. If either enactment

made such a change, the resulting impairments are not unconstitutional, both

because they are not substantial, and because they constituted a reasonable and

necessary means to address a significant and legitimate public purpose.

Accordingly, this Court should dismiss the action as to TVF&R, or in the

event this court finds a justiciable controversy, conclude that the 2013

legislation is constitutional and valid in all respects.

IV. SUMMARY OF MATERIAL FACTS.

The facts in this matter are set out in the Special Masters Report, which

is adopted herein. TVF&R addresses the facts relevant to each assignment of

error in the context of its responses below.


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RESPONSE TO ASSIGNMENTS OF ERROR

V. AS A PRELIMINARY MATTER, THERE IS NO JUSTICIABLE

CONTROVERSY, AND PETITIONERS CUSTER AND DITTER

HAVE FAILED TO STATE A CLAIM AGAINST TVF&R.

Petitioners allege that TVF&R is liable only to the PERB as an employer

for a statutory contract. Petitioners allege that the state (specifically the PERB)

is primarily liable, and the PERS statutes bear this out. More to the point,

Petitioners prayer for relief seeks only that respondent employers by and

through PERB pay to petitionersbenefits in an amount no less than that they

would have received had SB 822 and/or SB 861 not been passed. (Emphasis

added.) SER-1. No direct liability of TVF&R was sought in this case.

Virtually identical language is used in Petitioners prayer under Petitioners

takingsclaim. Id.

It is the duty of the PERB to determine who are eligible members of

PERS, and to compute amounts of benefits to which they are entitled. ORS

238.250; 238.285; 238.300, et seq. It is the duty of the PERB to determine the

amounts needed to fund the benefits paid, to determine what funds are available

from earnings of the PERS fund, from employee contributions, to determine the

amount of employer contributions are needed, and to allocate the proper amount

to each government employer. See, Strunk v. PERB, 338 Or 145, 158-60, 108

P3d 1058 (2005).


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If, and only if (1) Petitioners prevail in this action, (2) the PERB fails to

follow its statutory duty to properly allocate employer contributions to TVF&R

so as to cover the benefits which Petitioners might become entitled if they

prevail, and (3) TVF&R then declines to pay the lawful employer contributions

(or sums unpaid by PERS to Petitioners), will there be a justiciable controversy.

This case is much like that of Strunk, supra, where a claim was dismissed as

unripe because the controversy must involve present facts as opposed to a

dispute which is based on future events of a hypothetical issue.Id. at 154. In

Strunk, the PERB had agreed not to carry out the statutory acts complained of,

just as TVF&R has agreed to pay the employer contribution assessed against it

by the PERB, no matter the outcome of this or any other any challenge to the

PERB methods of computing such figures and benefits. See, Respondent

Tualatin Valley Fire & Rescues Answer to Petition for Direct Review

Legislation (Second Amended), p. 7. (TVF&R does not dispute its direct duty

to make contributions assessed by PERS). SER-2.

The PERB is the only entity whose conduct is challenged by Petitioners,

arising under the 2013 legislationthe duty of TVF&R is acknowledged in

Petitioners prayer to be a duty only to pay the PERB, and no direct liability to

Petitioners is sought. Any duty of TVF&R to make payments directly to

Petitioners (which are not sought as a remedy in this action) under the 2013

legislation can arise only if certain hypothetical events occur in the future:


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Petitioners must prevail in this action, the PERB must refuse to perform its duty

to properly pay benefits to Petitioners after the judgment of this court is entered,

and TVF&R must refuse to pay those benefits. None of these events is alleged

as occurring, and they cannot be, because they have not occurred.

No matter how this court rules, immediately after judgment is entered,

TVF&R will owe nothing to Petitioners directly, even if they prevail, because

there is neither allegation nor evidence that the PERB will fail to comply with

the order of this court. As to any liability to the PERB, (which is irrelevant to

this case) it is possiblethe evidence does not address the issuethat

TVF&R may owe nothing extra to PERB, if Petitioners prevail.

This case differs from Stovall v. State by and Through Dept of

Transportation, 324 Or 92, 922 P2d 646 (1991). Here, TVF&R has

acknowledged that it will pay the PERBs assessments of employer

contributions, as required by law. SER-2. Compare, Stovall, 324 Or at 120-25

(existing dispute as to local governments duty to fund the employer

contributions to the PERB, and hypothetical issue of direct liability to petitioner

discussed, but that is not raised by Petitioners as an issue in this case).

There is no controversy hereTVF&R does not dispute its duty to pay

whatever assessments are made against it by the PERB. The duty of TVF&R to

pay any assessment against it, including any possible amounts that were not

assessed due to the 2013 legislation, has not yet arisen (changes in contribution


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rates follow changes in benefits by up to two years). The duty of TVF&R to

make any direct payment to Petitioners arising on the hypothetical, future, non-

alleged, and non-proven default of the PERB has not yet arisen. This case is

not ripe as to any liability of TVF&R.

In addition, there is no adversity. TVF&R does not dispute its liability to

pay its lawfully computed employer contribution before and following the

decision of this court. No direct liability to Petitioners is prayed for. There is

simply no dispute in this matter, only the need for this Court to determine what

the law is, and instructions to the PERB what its computational duties are with

respect to both benefits and employer contributions. TVF&R will comply with

the result. This case must be dismissed as to TVF&R, as non justiciable, and

for failure to state a claim.

VI. RESPONSE TO PETITIONERS FIRST AND THIRDASSIGNMENTS OF ERROR.

The 2013 legislation does not impair Petitioners contract rights in

violation of either Article 1, 21 of the Oregon Constitution or Article 1, 10 of

the United States Constitution, and the legislation does not breach Petitioners

contract rights.

A. Standard of Review.

The court conducts a de novoreview of the evidentiary record assembled

by the Special Master and a plenary review or analysis of the legal issues

presented. Strunk v. PERB, 338 Or 145, 155, 108 P3d 1058 (2005).


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B. The 2013 Legislative Changes to the Formula by Which

COLAs are Calculated Under ORS 238.360 Do Not Impair a

Contract, In Violation of the Oregon and United States

Constitutions.

In addition to the arguments set forth in Section C below, TVF&R adopts

the arguments asserted by the State of Oregon in its Combined Response to All

Assignments of Error, and the County/School District Respondents in their

Merits Brief of Respondents Linn County, Estacada School District, Oregon

City School District, Ontario School District , West Linn School District,

Beaverton School District, Bend School District and Intervenors Oregon School

Boards Association and Association of Oregon Counties as each brief pertain to

these two Assignments of Error.

C. There is no Contract Between Petitioners and TVF&R.

Planning for long-term financial health is an important function of local

governments, including TVF&R. Another important governmental function is

whether to hire and how much to pay government employees. This court has

delivered two lines of decisions that are, respectfully, contradictory, rendering it

difficult for the governing bodies of local governments to properly budget for

short term, and plan for the long-term stability of those governments to deliver

the essential government services that they were created (and for which their

governing boards were elected) to deliver.


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Respectfully, it is incumbent upon this Court to give guidance to those

largely volunteer governing boards so that they can make short and long-term

financial and service delivery plans.

i. The First Line of Cases.

Beginning approximately 1929, and continuing to the present day, this

Court has held that inherent limitations on the legislative power of municipal

corporations limit the authority of their governing bodies to entering into long-

term financial and other contracts, rendering longer contracts void, or at least

voidable. This Court determined that to hold otherwise would infringe upon the

rights of the public to carry out their democratic function in our government, by

prohibiting them from electing new legislative bodies that make different policy

choices. Thus, this Court has adopted a rule that certain kinds of contracts are

outside the legislative power of the elected bodies.

InJohnson v. City of Pendleton, 131 Or 46, 280 P 873 (1929), the city

adopted an ordinance that the city would impose a tax to build and operate a

new city building. The court ruled that the action was invalid because the tax

would be imposed for all time, or at least for an indefinite time, limiting the

authority of subsequent governmental bodies to modify or repeal the tax. The

tax was therefore void.

A more important case isMiles v. City of Baker,152 Or 87, 51 P2d 1047

(1935). The court there held that an out-going city council could not bind a


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subsequently elected counsel to the terms of a contract, because the contract

involved providing a governmental function, an audit. The court held that the

members of a governing body of finite tenure (an elected body) are prohibited

from binding a subsequently elected body to a contract that calls for the

performance of a governmental function. More recently, that same rule was

applied to the provision of sheriffs' services by a county, in Graves v. Arnado,

307 Or 358, 768 P2d 910 (1989). (Elected sheriff is not bound by the contracts

between a prior elected sheriff and a deputy.)

Since 1929, cities and counties, as well as the courts in Oregon, have

appliedJohnson v. City of Pendleton,supra, to allow contracts to extend for a

considerable period of time. However, a governmental body may not bind a

subsequent governmental body past the time when a majority of the elected

officials of that body must stand for reelection. The subsequent board, even if it

is the same people, must have the ability to terminate the contract. See, e.g.,

Klamath County Commissioners v. Select County Employees,148 Or App 48,

939 P2d 80 (1997).

The recent cases in this line of decisions involve employment issues. As

a result, the decisions hold that elected officials, such as a sheriff, who holds

statutory authority to fire deputies, may not be bound by a predecessors' hiring

contracts. Graves v. Arnado, supra.


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This rule has not been applied to the state, to restrict the power of the

Legislative Assembly. However, the question in this case is whether the rule

applies to TVF&R, and whether the terms of a statutory contract that persists

long beyond the elected terms of board members, is a valid and binding contract

of TVF&R (not the state).

In this case, the governing body of TVF&R is an elected body of finite

tenure. ORS 478.221, et seq. Hiring personnel to provide fire services is a

governmental function, just as providing sheriffs services are. See, ORS

Chapter 478. Whether, and how to allocate funds for personnel salaries and

benefits is also a discretionary governmental function. See,McBride v.

Magnuson, 282 Or 433, 437, 578 P2d 1259 (1978) (discretionary);Klamath

County Commissioners , 148 Or App at 54 ([W]ith respect to personnel

***governmental functions [include] making policy judgments, ranking and

evaluating policy objectives and making choices among competing goals and

priorities.) See also,Rooney v. Kulongoski, 322 Or 15, 56, 902 P.2d 1143

(1995), citing City of Enterprise v. State, 156 Or 623, 69 P2d 953 (1937)

(statute that, among other things, vested court with power to levy taxes, fix

salaries of municipal officers, and effect municipal contracts vested legislative

power in judiciary).

Also in this case, the obligations of the PERS contract continue long

after the term of any given majority of the board of directors of TVF&R


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expires, and the board must stand for reelection. Under the reasoning of these

cases, there can be no long-term PERS contract between TVF&R and either

Custer or Ditters. It is beyond the legislative authority of TVF&Rs directors to

bind subsequent directors.

ii. The Second Line of Cases.

The second line of cases hold the opposite, but the court in those cases

did not consider how the first line of cases could affect the courts decision.

The second line of cases held that the pension plan offered when a state

employee was hired was a unilateral offer that was accepted and became a term

of the PERS contract between the employer and that employee, when the

employee first performed work. Hughes v. State,314 Or 1, 20, 838 P2d 1018

(1992). However, the terms of the contract have changed many times over the

years, (see, discussion of the evolution of PERS in Strunk, supra). The

numerous changes, in and of themselves, evidence the intention of the state that

the terms of the PERS contract were not intended to be forever fixed, but

would evolve over time. In fact, this Court has held that the term of a PERS

contract are that a pension must be delivered, demonstrating that no particular

terms are required in it, leaving great flexibility to the state to determine exactly

what pension may be provided, so long as it is not substantially impaired.

Hughes at 20. (On vesting, an employees contractual interest in apension


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13

plan may not be substantially impaired by subsequent legislation.)Id.

(Emphasis added.)

The court went on to hold that [a statute], as a term of the PERS

contract, means that the state promised that all PERS retirement benefits that

have accrued or are accruing for work performed so long as [the statute]

remained in effect *** [T]he legislature did not contract away its ability to

[modify the term] in the future based on work not yet performed. Hughes at

29. Although not discussed, this language can help to conform this second line

of cases to the first, as applied to the stateeven if one legislative body binds

subsequent bodies by adopting statutes that govern employment contracts, the

statutes themselves may be repealed or amended, to the extent that they apply to

future employment benefits not yet earned when the statute is amended or

repealed.

As applied to the Custer and Ditters claims against TVF&R, these

employees did not receive nor did they accept a promise of PERS benefits when

they were hired, in 1968 and 1972, respectively. The first dates when they were

entitled to participate in PERS was 1981 and 1989, respectively. SER-3 - 4.

Each accepted an offer from TVF&R (actually TVF&Rspredecessors) to work

for years with non-PERS benefits, primarily life and health insurance. Id.

These became the terms of their Pension contract for 13 and 17 years,


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14

respectively. And, if the PERS contract is applied to those years, it would

violate ORS 174.010, which mandates that this court not add terms to contracts.

Petitioners have offered no evidence of the terms of those pre-PERS

employment contracts, or how SB 822 and SB 861 would apply to benefits

accrued during those years of service. They simply assume the PERS statutes

(from what year is not clear) govern them.

In Stovall, supra, the court discussed that that there is a contract between

municipal corporations and their employee-PERS members. The contract

between them, however, would be enforceable only if PERS or the state failed

to pay the statutory amounts owed. Stovall, 344 Or at 124. There is no

allegation of such liability herePetitioners did not seek the relief of direct

liability to them from TVF&R and TVF&R has at all material times paid the

sums required by the PERS Board, and no breach is alleged by Petitioners.

There is not even an allegation that the PERB has failed to assess TVF&R for

the amounts required should Petitioners prevail. And TVF&R stated in its

Response to the Petition that it does not dispute its direct duty to make

contributions assessed by PERS. SER-2.

There is no dispute that TVF&R will make all PERS contributions

assessed against it. There is no allegation of a breach of contract by TVF&R,

nor of any demand that TVF&R pay the amounts claimed by Petitioners, that

PERS is not authorized or required to pay under the 2013 legislation. All there


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15

is, is a hypothetical effect on Petitioners, (1) if they prevail, (2) if the PERB

declines to pay the benefits this court orders, and assess TVF&R for the

amounts it will owe, and (3) if TVF&R changes its mind and declines to pay

such assessment. TVF&R is not in breach of any contract at this time, and any

future breach, no matter how hypothetical, is subject to an action when such a

controversy might arise. Until then, the direct review of the 2013 legislation,

which directly affects only the PERB, and not TVF&R, may proceed against

the PERB (and any intervenors that wish to participate) but judgment in favor

of TVF&R is proper.

D. Attorneys Fees Are Not Available.

Petitioners seek attorneys fees but cite nothing more than a bare claim to

such fees under a statute or an equitable doctrine.

i. ORS 652.200 is Inapplicable.

ORS 652.200 provides attorneys fees for unpaid wages, or for late

payment of final wages. There are no wages owed in this case, only

retirement benefits, that by their very nature cannot be paid when wages are

paid, during the time of employment or immediately after the termination of

employment. Wages do not include the contract claims asserted here, whether

for breach of contract or statutory contract. Swartout v. Precision Castparts

Corp., 83 Or App 203, 730 P2d 1270 (1986). No Attorneys fees are available

to Petitioners.


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16

ii. The Common Fund Doctrine.

The common fund doctrine is used to spread litigation expenses among

all beneficiaries of a preserved fund so that litigant-beneficiaries are not

required to bear the entire financial burden of the litigation while inactive

beneficiaries receive the benefits at no cost. Strunk v. PERB, 341 Or 175,181,

139 P.3d 956, (2006). TVF&R objects to payment of attorneys fees, but if they

are awarded, asserts that they should be paid from the pool of benefits

awardable to beneficiaries that might be protected by this action. They should

not be assessed against non-prevailing PERS members benefits, and should not

be assessed as employer contributions.

VII. RESPONSE TO PETITIONERS SECOND ASSIGNMENTOF

ERROR.

The 2013 legislation does not take Petitioners private property for public

use without just compensation in violation of either Article I, 18 of the Oregon

Constitution or the 5th and 14th Amendments of the United States Constitution.

A. Standard of Review.

The court conducts a de novoreview of the evidentiary record assembled

by the Special Master and a plenary review or analysis of the legal issues

presented. Strunk v. PERB, 338 Or 145, 155, 108 P3d 1058.


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17

B. This Court Has Fully Addressed Petitioners Taking Claim in

Strunk.

TVF&R hereby adopts the arguments asserted by the State in its

Combined Arguments, as they pertain to this Assignment of Error, and

incorporates them herein. In addition, TVF&R asserts:

This Court held, with respect to the Strunkpetitioners claims that parts

of the 2003 PERS legislation violated the state and federal takings causes, that

such claims are impossible to assert in this kind of case, because if there is an

impairment of contract, Petitioners remedy arises under that provision, and if

there is no impairment of contract, there is no taking for which compensation

must be paid:

The foregoing holdings dispose of those claims,

either because we have voided the challengedlegislation in light of petitioners state contract claims

or because our determination of the particularobligations set out in the PERS contract obviates the

fundamental premise of Petitioners remaining claims(that is, that the PERS contract granted them rights

that cannot be breached, impaired, or taken for publicuse). We therefore need not discuss those claims

further.

/////

/////

/////


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18

Strunk, 338 Or at 237-38. The same reasoning applies here. Petitioners

takings claims must fail, and deserve no further discussion.

Dated this 25th day of August, 2014.

JORDAN RAMIS PC

By:s/Edward H. Trompke

Edward H. Trompke, OSB # 843653Telephone: (503) 598-7070

Attorney for Respondent Tualatin Valley Fire &Rescue


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INDEX OF RESPONDENT TUALATIN VALLEY FIRE & RESCUES


Court

Entry

Date

Document SER No.

12-6-13 Petition for Direct ReviewLegislation

(Second Amended) (Page 23 only)

SER-1

1-9-14 Respondent Tualatin Valley Fire &Rescues Answer to Petition for Direct

ReviewLegislation (Second Amended)(Page 7 only)

SER-2

4-30-14 Special Masters Final Report (Pages 89

and 90 only)

SER-34


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WHEREFORE, petitioners petition this court for an order:

1. Appointing a special master under Section 19, subsection 6, of SB 822

and Section 11, subsection 6, of SB 861 to hear evidence and to propose

recommended findings of facts;

2. Declaring SB 822 and SB 861 to be unconstitutional and void in whole or

in part;

3. In the alternative, declaring that SB 822 and SB 861 in whole or in part

constitute a breach of the petitioners' PERS and/or OPSRP contracts

and ordering that respondent employers by and through PERB pay to

petitioners benefits in an amount no less than that they would have

received had SB 822 and/or SB 861 not been passed;

4. In the alternative, declaring that SB 822 and SB 861 in whole or in part

constitute an unconstitutional taking and ordering that respondent

employers by and through PERB pay to petitioners just compensation

measured as the difference between what petitioners would have

received in benefits had SB 822 and/or SB 861 not been enacted and

what petitioners will now receive as a result of SB 822 and/or SB 861;

5. Enjoining respondents from implementing SB 822 and SB 861 in whole

or in part, including issuing a preliminary injunction;

6. Granting such other relief as may be just and equitable; and

Page 23 - PETITION FOR DIRECT REVIEW - LEGISLATION (SECONDAMENDED)

SER - 1


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7

2

With respect to paragraph 2

ofthe

Second Amended Petition, TVF R

admits that certain provisions

of

the statutes cited therein, in certain

circumstances, have created certain contracts among certain persons.

TVF R

is without sufficient information

at

this time to determine whether, and

on

what

terms, such statutory contracts may exist with petitioners Custer and Ditter.

TVF R further alleges in response to paragraph 2 that it generally admits that it

agreed to enroll petitioners Custer and Ditter in PERS, but denies that it agreed

with petitioners to provide more than such enrollment.

TVF R

does not

dispute its direct duty to make contributions assessed

by

PERS. TVF R's

duties to petitioners Custer and Ditter extended only through petitioners'

respective dates

of

retirement, at which time only their respective contracts with

the state

of

Oregon PERS continued. TVF

R

otherwise denies the remainder

of paragraph 2.

3.

With respect to paragraph 3 ofthe Second Amended Petition,

TVF R

admits that SB 822 became law on May 6, 2013 and that SB

861

became law on

October 8, 2013. TVF R is without sufficient information to admit or deny the

remainder of paragraph 3.

Page 7 - RESPONDENT TUALATIN VALLEY FIRE RESCUE'S

ANSWER TO PETITION

FOR

DIRECT

REVIEW

- LEGISLATION

(SECOND AMENDED) 46796 71693805686j.DOCx\RMH/J/8/20J4

SER - 2


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payroll, resulting in savings of approxim ately $835,682 in Linn Co unty's budget for

fiscal year 2013-2014. That savings is equivalent to the cost of 8.5 average positions

(based on the average cost to the County of an employ ee) or about 7.5 deputy sheriff

positions.

148

C. Tualatin Valley Fire Rescue

4 9

Tualatin Valley Fire and Rescue ( TVF& R ) was organized in 1989 by the

merger, consolidation or contracting for services of m any other fire districts. TVF &R

employed two petitioners, Charles Custer and E ugene D itter.

W est Slope Fire Department ( W est Slope ) first hired Custer i n

1968. West

Slope hired him under a contract that provided non-PE RS retirement benefits that first

granted benefits upon his future retirement, under the contract terms and conditions then

in force. W est Slope became part of Washington C ounty Fire District No. 1( Dist. No.

1 ) in 1972, wh ich in turn, became part of TVF& R in 1989. Custer first became eligible

for PER S benefits July 1, 1981, while at District No. 1, though h e previously worked for

about 13 years und er a predecessor retirement plan and agreement.

Tualatin Rural Fire Protection D istrict ( Tualatin Rural ) first hired Ditter in 1973.

Tualatin Rural hired him under

contract that provided for non-PE RS retirement

149 Joint Stipulated F acts, p. 52, 152.

144

The TVF& R facts are stated in TVF& R's Proposed Stipulated Facts Regarding

Petitioners Custer and Ditter and the Declaration of Debra Guzm an (Ex. TVFR 1). The

M oro Petitioners did not controvert those facts.

ee

M oro Petitioners' Respon se to

TVF&R's Proposed Stipulated Facts.

89

SER - 3


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benefits, upon his future retirement, under the terms and cond itions of the contract and

retirement plan then in force. Tualatin Rural became a part of TVF &R in 1989.

Ditter first became eligible for PERS retirement benefits in 1989 w hen Tualatin

Rural joined TV F&R , though he previously w orked for about 17 years under the terms of

a predecessor plan and contract.

At all times that they were emp loyed by T VF& R or its predecessor entities, Custer

and D itter w ere subject to the terms of express con tracts that governed their eligibility for

retirement benefits.

D. City of Portlgnd

5 o

Acco rding to the Chief Ad ministrative Officer for City of Portland, the City's

2013-2014 budget includes annual budgeted exp enditures totaling $2.65 billion for

delivering a variety of municipal services, including Police, Fire, Parks, Utility, and

Transportation serviees.

W ith that budget, the City is not able to m aintain the level of m unicipal services

that it maintained before the recent econo mic recession. The C ity attributes this to the

financial ehallenges of the economie recession and other non-econo mic budg et

challenges. Though the City's population has grow n by m ore than 23,000 residents,

discretionary reven ue grow th has failed to allow the C ity to maintain service levels. For

150

The C ity of Portland's facts were set forth in the Declaration of Fred M iller (Ex. P 1).

The M oro Petitioners did not controvert those facts.

ee Moro Petitioners' Response to

City of Po rtland's Proposed Stipulated Facts.

90

SER - 4


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Page 1- CERTIFICATE OF FILING AND SERVICE 46796-71693 982168_2.DOC\RMH/8/25/2014

CERTIFICATE OF FILING AND SERVICE

I hereby certify that on the date shown below, I electronically filed the

foregoing RESPONDENT TUALATIN VALLEY FIRE & RESCUES

ANSWERING BRIEF AND SUPPLEMENTAL EXCERPT OF RECORD

on:

Appellate Court Administrator

Appellate Court Records Section

1163 State StSalem OR 97301-2563

I further hereby certify that on the date shown below I served two (2) true

and correct copies of RESPONDENT TUALATIN VALLEY FIRE &

RESCUES ANSWERING BRIEF AND SUPPLEMENTAL EXCERPT

OF RECORDby first-class mail, postage prepaid on:

Wayne Stanley Jones (Courtesy copy also by e-mail)18 N Foxhill RdNorth Salt Lake UT [email protected]

(801) 296-1552Petitioner Pro se

Michael D. Reynolds (Courtesy copy also by e-mail)8012 Sunnyside Ave NSeattle WA 98103

[email protected]

(206)-910-6568

Petitioner Pro se

George A. Riemer (Courtesy copy also by e-mail)Arizona CJC1501 W. Washington St Ste 229Phoenix AZ 85007OSB # 804712(602) [email protected] Pro se
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Eugene J. Karandy, II, OSB # 972987Linn County Attorney's OfficePO Box 100Albany OR 97321(541) [email protected]

Attorney for Respondent Linn County

William B. Crow, OSB # 610180Schwabe Williamson & Wyatt PC1211 SW 5th Ave Ste 1900Portland OR 97204(503) [email protected] for League of Oregon Cities

Keith L. Kutler, OSB # 852626Oregon Department of JusticeTax & Finance Division1162 Court St NESalem OR 97301-4096(503) [email protected] Respondents Ellen Rosenblum, Public EmployeesRetirement System, Public Employees Retirement Board, John A.Kitzhaber, and State of Oregon

Kenneth Scott MontoyaCity Attorneys Office555 Liberty St, SE, Suite 205Salem, OR 97301OSB # 064467(503)[email protected] for Respondent City of Salem

Thomas A. WoodleyWOODLEY & McGILLIVARY

1101 Vermont Ave, N.W.Suite 1000Washington, D.C. 20005(202) [email protected] for Amicus Curiae IAFF
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Douglas L. SteeleWOODLEY & McGILLIVARY1101 Vermont Ave, N.W.Suite 1000Washington, D.C. 20005(202) [email protected]


I further hereby certify that on the date shown below I electronically

served via the courts e-serve system the foregoing RESPONDENT

TUALATIN VALLEY FIRE & RESCUES ANSWERING BRIEF AND

SUPPLEMENTAL EXCERPT OF RECORD on:

Gregory A Hartman, OSB # 741283Bennett Hartman Morris & Kaplan210 SW Morrison St Ste 500Portland OR 97204(503) [email protected] for Petitioners Everice Moro, Terri Domenigoni, CharlesCuster, John Hawkins, Michael Arken, Eugene Ditter, John O'Kief,Michael Smith, Lane Johnson, Greg Clouser, Brandon Silence,Alison Vickery, and Jin Voek

Lisa M. Freiley, OSB # 912763Oregon School Boards AssociationPO Box 1068Salem OR 97308(503) [email protected] for Respondents Estacada School District, Oregon CitySchool District, Ontario School District, West Linn SchoolDistrict, Bend School District, and Oregon School BoardsAssociation

Harry M. Auerbach, OSB # 821830City Attorney's Office1221 SW 4th Ave Ste 430Portland OR 97204(503) [email protected] for Respondent City of Portland
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


40/42


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William F. Gary, OSB # 770325Harrang Long Gary Rudnick PC360 E 10th Ave Ste 300Eugene OR 97440-3273(541) [email protected] for Respondents Linn County, Estacada School District,

Oregon City School District, Ontario School District, West LinnSchool District, Bend School District, Oregon School BoardsAssociation, and Beaverton School District

Aruna A Masih, OSB # 973241Bennett Hartman Morris & Kaplan LLP210 SW Morrison St Ste 500Portland OR 97204(503) [email protected] for Petitioners Everice Moro, Terri Domenigoni, Charles

Custer, John Hawkins, Michael Arken, Eugene Ditter, John O'Kief,Michael Smith, Lane Johnson, Greg Clouser, Brandon Silence,Alison Vickery, and Jin Voek

Leora Coleman-Fire, OSB # 113581Schwabe Williamson & Wyatt PC - Portland1211 SW Fifth Ste 1600Portland OR 97204(503) [email protected] for Intervenor League of Oregon Cities

Sara Kobak, OSB # 023495Schwabe Williamson & Wyatt PC - Portland1211 SW Fifth Ste 1900Portland OR 97204(503) [email protected] for Intervenor League of Oregon Cities

Michael A. Casper, OSB # 062000

Dept. of Justice Appellate Division1162 Court St NESalem OR 97301(503) [email protected] for Respondents Ellen Rosenblum, Public EmployeesRetirement System, Public Employees Retirement Board, and JohnA. Kitzhaber
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Kenneth A. McGair, OSB # 990148Portland Office of City Attorney1221 SW 4th Ave, Ste 430Portland OR 97204(503) [email protected] for Respondent City of Portland

Craig A. Crispin, OSB # 82485Crispin Employment Lawyers1834 SW 58th Avenue, Suite 200Portland, Oregon 97221(503) [email protected] Amicus Curiae AARP

Sarah K. Drescher, OSB # 042762

Tedesco Law Group3021 NE BroadwayPortland, OR 97232(866) [email protected] for Amicus Curiae IAFF

Matthew J. Merritt, OSB # 122206Department of JusticeAppellate Division1162 Court St NE

Salem OR 97301(503) [email protected] for Respondents Ellen Rosenblum, Public EmployeesRetirement System, Public Employees Retirement Board, John A.Kitzhaber, and State of Oregon

DATED: August 25, 2014

s/Edward H. TrompkeEdward H. Trompke, OSB # 843653

Telephone: (503) 598-7070Attorney for Respondent Tualatin Valley Fire

& Rescue
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

tualatin valley fire & rescue answer brief

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